By Tom Allison
There’s a nationwide debate about the role public policy should play in regulating institutions of higher learning, particularly for-profit schools that promise students good-paying jobs after graduation. A disproportionate amount of Pell and G.I. Bill dollars go to students attending these schools, yet for-profits — which serve nine percent of all college students — produce almost half of all the loan defaults. How we measure student and institutional success, and hold public dollars accountable, is a serious issue affecting the financial circumstances of millions of students.
That’s why some were surprised that Wisconsin Governor Scott Walker proposed disbanding a board that regulates for-profit colleges in his budget request released last week. According to Education Approval Board executive secretary David Dies, the move would make Wisconsin the “only state in the nation that would allow institutions to operat[e] without any type, any checks and balances in place.”
But what are these institutions like? According to Young Invincibles’ calculations of the Department of Education’s 2012 Gainful Employment Information Rates, there are a lot of programs in Wisconsin that aren’t serving their students very well, and should be regulated to protect students from taking on massive amounts of debt for an education that doesn’t get them very far.
For instance, the typical for-profit program in Wisconsin has a default rate of 12.4 percent. That means that more than one out of every 10 students who attended a for-profit college can’t make enough money to repay his or her loans within three years of graduating. When students can’t repay their loans and enter into default, there can be severe consequences, such as wage garnishment and destroyed credit.
Some programs perform worse than others; for instance:
- Over a quarter of graduates of Herzing University’s massage therapy program in Madison defaulted on their loans. In fact, Herzing University has five programs with student loan default rates over 20 percent, ranging from computer science, business administration, and criminal justice.
- Empire Beauty School has three programs across the state (Green Bay, Madison, and Manitowoc) with high student loan default rates over 18 percent.
Another way to assess the value of a degree is looking at how much debt a student took on to attend school, compared to how much the student earns after graduation. The Department of Education calls this the debt-to-earnings ratio: your annual loan payment divided by your annual earnings.
Ideally, students with large amounts of debt should also earn a high income. If a program requires students to take on massive amounts of student debt but graduates don’t see the corresponding paycheck, it can be warning sign that the program is too expensive, students aren’t prepared for high-quality jobs, or both. Here are some lowlights across the state:
- Herzing University’s medical and clinical assistant program has a debt-to-earnings ratio of 13.5 percent. Their business and administration associate’s degree has a debt-to-earnings ratio of over 11 percent. In other words, if this student makes $30,000 a year, they pay $3,300 per year in debt repayment.
- The worst in the state is Midwest College of Oriental Medicine’s “traditional Chinese/Asian medicine and Chinese herbology” master’s program, where graduates can expect to spend almost a quarter of their earnings in debt repayment.
Some of these programs would fail or be on notice under the Department of Education’s regulations of for-profit programs, but even more would have failed under stronger rules. Considering the fact that the Department of Education considerably weakened their regulation of for-profit schools last year, Gov Walker’s move to close the Education Approval Board means only more risk for Wisconsin’s most vulnerable students.